When Twitter became a public company in November 2013, its logo was hung on a banner over the New York Stock Exchange.
Photograph: Emmanuel Dunand/AFP/Getty Images

When the chief executive of Twitter announced he was stepping down on Thursday, staff knew there was only one way to mark his surprise departure. A hashtag on the social network was created – #thankyoudickc – for colleagues to lavish praise on Dick Costolo, a former standup comedian turned Silicon Valley entrepreneur. “140 characters certainly not enough #thankyoudickc,” said one employee.

In his nearly five years in the job, Twitter has grown from a few million users to 302 million. Why then would the 51-year-old leave one of the most high-profile jobs at one of the tech industry’s brightest shining stars? Despite his popularity and success in helping the company mature, Costolo has always been caught between conflicting visions of what Twitter is capable of being: a social utility that promises to be a democratic civic space for all, or a commercial service.

Dick Costolo: Twitter unfollows the leader as social milestones are missed

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As soon as Twitter became a public company in November 2013, investors started to push for strategies for aggressive growth and the requisite lucrative revenue plans. Wall Street wanted and expected Twitter to match Facebook for impact, scale and ambition. Twitter should be a billion-user business, investors argued, distinct from Facebook in its openness and an attractive platform for brands and marketers.

Yet comparisons to Facebook, in those terms of strategy, scale and revenue, have not served Twitter well. Costolo and Jack Dorsey, the co-founder who is taking over as interim chief executive, have both insisted the move was not connected to Twitter’s recent financial results, which saw those user numbers grow just 4.86%. But while leaving might have been a decision made by Costolo, it is set in the context of an ongoing problem in attracting and keeping new users, and the revenue implications that come with that.

Twitter accounts for 1.6% of the critical US digital advertising market – which is worth $50.73bn (£32.75bn) – compared with Facebook’s 7.6%. And when it comes to the fast-growing mobile market, Twitter accounts for 3.6% of ads on US phones and tablets against Facebook’s 18.5%.

Chris Sacca, a major investor in Twitter and other technology companies, wrote about the company’s challenges earlier this month: “Twitter has failed to meet its own stated user-growth expectations and has not been able to take advantage of the massive number of users who have signed up for accounts and then not come back.”

He was critical of the company’s shortcomings in certain advertising categories that meant that its financial results kept disappointing Wall Street analysts. “In the wake of this, Twitter’s efforts to convince the investing community of the opportunity ahead fell flat. Consequently the stock is trading near a six-month low, well below its IPO closing day price, and the company is suffering through a seemingly endless negative press cycle.”

Twitter has also been cautious and conservative in imposing advertising products on users that feel ownership of their feeds, yet at the same time has failed to exploit and explore the potential of the medium. Unlike Facebook, Twitter has become the place people go for commentary around live events, whether football finals, TV talent shows or election debates. But Twitter has added very little to help people get the most from these events; a gaping commercial opportunity missed.

Twitter has also suffered damage to its reputation because of a perception that it hasn’t been able to eliminate abuse and threats of violence, often directed at women and minorities. For his part, Costolo was the first technology chief to address the issue publicly, albeit through a leaked internal memo in which he frankly admitted that “we suck at dealing with abuse”. He said he would take personal responsibility, but while the company made modest improvements to the reporting procedure, abuse has proved very hard to stamp out.

Twitter’s greatest assets are its openness, simplicity and brevity, where Facebook is overwhelming, comprehensive and superficial at the same time. The constant comparisons with Facebook – which has 1.44 billion users to Twitter’s 302 million – seem to have undermined Twitter’s confidence in itself and its own vision.

Where the selective friendship groups of Facebook make sense (to varying degrees) to new users, Twitter can be more intimidating. Yet the 140-character simplicity of Twitter’s platform and the opportunity potential to be the “civic square” of popular debate offers just as much value and, usually, less indulgent conversations. Historic messages are allowed to fade in Twitter, more like real-life conversations – rather than adding to an ever increasing to-do list, like email.

Whatever its advantages, Twitter is certainly less mainstream than Facebook. So while it is under pressure to achieve the same growth and advertising revenues as Facebook, it is also accused of being too niche, beloved as it is by journalists and marketers. Those who have stuck it out through the awkward initiation period on the social network are loyal and very active; the problem for those first joining Twitter is to work out who to follow, how to find people and exactly what users should be tweeting to the world.

For journalists, Twitter as both a newsgathering and news broadcasting tool has become invaluable. There are also many features media organisations and others would pay for that Twitter hasn’t begun to test out, such as comprehensive access to the archive of tweets, or lists of experts to follow on a topic that would be otherwise difficult to source.

Whoever becomes Twitter’s new boss is unlikely to stray far from the strategy already set out by its board. The social network needs to do more to keep new users by showing off its key features and expanding tutorials and step up to its responsibility to support users who suffer abuse and aggressive trolling on the service. But Twitter cannot succeed if it defines itself against Facebook; the network and its investors need to have more confidence in its unique qualities.